Court orders Celsius network assets to be reviewed by independent reviewer: report

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An independent reviewer will review various aspects of Celsius Network’s digital assets, a US bankruptcy court has heard. This indicates that the failing crypto lending platform will face more scrutiny of its financial conduct.

U.S. Bankruptcy Judge Martin Glenn on Wednesday approved a request to do so, media reported. However, the reviewer has not yet been selected.

Deepen by an independent examiner

The court order to appoint an independent reviewer follows the Justice Department’s repeated call for greater transparency in insolvency hearings.

In this case, the reviewer will examine how Celsius stores its crypto assets and whether different account types are mixed at any given time.

A committee of unsecured creditors, represented by the law firm White & Case, is conducting an extensive investigation into the company and its officials, including CEO Alex Mashinsky. He is receiving information about his withdrawals from Celsius, the cover said, attributing the information to Greg Pesce of law firm White & Case.

Given this investigation, the role of the independent reviewer was reduced to avoid duplication after a discussion between the US trustee and lawyers for Celsius creditors, Pesce added.

Celsius could be insolvent since 2019

Recently, Vermont regulators discovered that Celsius had been insolvent since 2019 and called for further investigation into possible financial misconduct by its management team. Documents have revealed that the company failed to comply with securities laws and misled investors about the safety of funds and the promises made to investors.

Vermont regulators also revealed that Celsius chief financial officer Chris Ferraro admitted in court that the network’s financial problems began with losses suffered in 2020 and 2021. This contradicted their claim that the platform was facing liquidity problems due to the stock market crash of 2022.

Plea to withdraw for $50 million

Earlier this month, Celsius Network filed a petition in bankruptcy court seeking permission for a small group of customers to withdraw their holdings from the custodial program and hold accounts, two different types of storage wallets. Celsius requested the release of $50 million of the $225 million held in these types of accounts.

On June 13, Celsius halted withdrawals, trades and transfers between accounts, citing extreme market conditions. Two days later, she hired restructuring lawyers to help her through financial difficulties.

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